Getting the house and finances organised…slowly

Financial Friday: So how does a family in debt become Financially Independent?

The answer is of course slowly, very slowly and you can’t start anything without knowing what you owe.

When I worked out our overall debt I came up with the figure of £144,600.

Oh my, doesn’t that sound a lot!?! Are you imagining five star hotels and skiing holidays? Perhaps I drive a flash car?

Sadly I have not been experiencing any five star hotels or skiing holidays. Sob. Now if I break the debt down we can see in all its glory the debt we owe:

Mortgage of £115,000 at 2.49%.

Mortgage of £20,000 at 3%.

‘Loan’ of £6,000 at 0%.

Credit Card of £3,000 at 0%.

Credit Card of £600 at 0%

Now that doesn’t seem too bad does it? After all everyone has a mortgage and credit cards, don’t they?*

Well I don’t want them.

It feels like a bit of a minefield reading other people’s thoughts on reducing debt with some shouting that you pay off the highest debt first, others stating you’re a fool to pay off your mortgage when interest rates are so low and some saying you only live once and go book that holiday now as you only get to live once! (If reincarnation is a thing may I come back as a tree please? I reckon it’ll be restful)

The Mortgage – Interestingly enough we’ve overpaid the mortgage whenever possible since first walking through our very own front door.* When our current fix ends in 2020 we should owe £90,000 being half the amount we actually bought our current house which I’m pretty bloody chuffed with. Whilst I have briefly thought about stopping the over-payments to invest the money instead, I’m going to leave the mortgage ticking over as is until 2020 or until interest rates start moving up at which time I’ll consider paying the ERC (Early Repayment Charge) and getting a long fix.

The ‘Loan’ – Without our family we’d certainly be a lot poorer. When the boiler goes kaput our first thought is to call our parents to find out a) if there’s a fix and b) which gas engineer they’d call. When the kids are unwell I call the mum’s first to a) gauge their reactions on how serious said illness/fall is and b) to ask whether they are free for the day as we have to go to work. Our families keep us going and help us out just as we would for them.

Our family also gifted us money when our boiler went bust. They literally saved us. They have never asked for the money back but I want to know that if they are ever short that I have funds set aside to offer. It may not be a loan in the traditional sense but dammit, I wont forget it.

The Credit Cards – We aim to pay these off by September at the latest. 0% credit cards are wonderful things when you have large DIY jobs to do and know you can pay them off by the end the 0% term ends. However I’ve got into the habit of popping anything costing over £20 on my credit card and it needs to stop.